A contentious coal loader for the Port of Newcastle was approved and later rejected after changes to formal advice to government, according to New South Wales Treasury documents obtained by the ABC's Four Corners.

Buildev Group, owned by Newcastle businessman Nathan Tinkler, proposed a fourth coal loader for the port, but then-MP Jodi McKay was opposed to the project.

Treasury documents obtained under public disclosure laws show that in 2010, the formal advice to then treasurer Eric Roozendaal was unequivocal.

It said a fourth coal loader for the port was unjustified and that there already was sufficient growth capacity in the port's coal supply chain.

The sites proposed for yet another coal loader already had an allowable use for a container terminal and an industrial park.

"Treasury considers that if a new bulk coal terminal was contemplated ... then probity concerns would require a new public development process," the documents said.

The documents also included undated and unsigned Treasury advice with a briefing paper in which its unequivocal "do-not proceed-without-public-tender" advice appeared to have changed.

"[The] Buildev proposal to develop a bulk coal terminal ... may be able to be negotiated with existing coal terminal operators," the papers said.

"Treasury's recommendation: land use planning may be able to be revised, however, the rights of existing coal terminal providers would need to be renegotiated."

Newcastle Port Corporation advised against another coal loader

Gary Webb, former chief executive of Newcastle Port Corporation, has told the ABC he was called to a 2010 meeting with then treasurer Mr Roozendaal where he repeated NPC and Hunter Development Corporation advice that another coal loader was not needed.

He says a Buildev executive was with the treasurer.

While Mr Webb said he readily accepted that government had the right to change strategy on land use, all processes should be transparent to ensure the public interest was being protected.

Mr Webb wants the coal loader process to become a case study to ensure that in future, the way governments make decisions is transparent.

The Tinkler coal loader controversy has been exposed by the Independent Commission Against Corruption (ICAC) as the context for a campaign to undermine Ms McKay.

ICAC has alleged that a destructive brochure circulated to letterboxes in the electorate was funded by Buildev.

Ms McKay and former premier Kristina Kenneally have said they were sickened by ICAC revelations that people within the Labor Party also were involved in the undermining campaign.

"It's a betrayal. The idea that somebody within our own party would undercut a candidate so badly that she would lose her seat ... that just turns my stomach," Ms Keneally said.

Ms McKay narrowly lost Newcastle to Liberal candidate Tim Owen, a former deputy commander of Australian forces in the Middle East.

Following more ICAC revelations, Mr Owen announced he would not be recontesting Newcastle after he acknowledged he unwittingly benefited from what ICAC alleges were prohibited donations from Buildev.

Mr Tinkler denies any impropriety.

Ex-treasurer Eric Roozendaal denied favouritism for Buildev

While acknowledging he had a heated telephone exchange with Ms McKay over the coal loader, Mr Roozendaal denied any favouritism for Mr Tinkler or Buildev.

On the changed Treasury advice he told 7.30 NSW it was "quite appropriate for government to examine alternative proposals for the port - but at the end of the day the matter was left to the incoming government."

The incoming Barry O'Farrell government accepted Buildev's proposal under its "unsolicited projects" procedures.

But after objective assessment by the Department of Premier and Cabinet it was rejected.

Mr Webb says a study on major reform of political slush funding practices in NSW, headed by top public administrator Dr Kerry Schott, should examine what happened in this case.

"What will the government of the future look like that ensures that people can't triangulate around officials in a way that has undue influence?" he said.

"That doesn't say that government can't change its mind but how do we do it in a way that is transparent?"

Additional research by Linton Besser and Mario Christodoulou.

A Four Corners report on political slush funds and influence peddling will be broadcast on Monday night at 8:30pm on ABC 1.